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Dive into Dividends: Top 5 Bargain Growth Stocks to Buy
Volatility and uncertainty in the stock market have taken the front seat in recent weeks on worries over higher interest rates for a longer time. In such a scenario, dividend investing seems to be a prudent option to fight the current market turmoil. Though dividend-paying stocks don't offer dramatic price appreciation, they provide a consistent income stream.
In particular, focusing on the growth level in this strategy leads to higher returns. Stocks with a strong history of dividend growth year over year form a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those that have high yields. We have selected five dividend growth stocks — Applied Materials Inc., PulteGroup Inc., Arcos Dorados Holdings Inc., McKesson Corp. and NetEase Inc.— that could be compelling picks for investors.
Why Dividend Growth?
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.
Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that a dividend increase is likely in the future.
Although these stocks do not necessarily have the highest yields, they have outperformed for a longer period than the broader stock market or any other dividend-paying stock.
Here are five of the 12 stocks that fit the bill:
California-based Applied Materials is one of the world's largest suppliers of equipment for the fabrication of semiconductors, flat panel liquid crystal displays (LCDs), and solar photovoltaic (PV) cells and modules. The company has a P/E ratio of 17.29 compared with the industry average of 22.12. It has an estimated growth rate of 2.60% for the fiscal year (ending October 2023).
Atlanta-based PulteGroup is engaged in homebuilding and financial services businesses, primarily in the United States. The company has a P/E ratio of 6.36 compared with the industry average of 8.15. Its earnings are estimated to grow 7.6% for this year.
PulteGroup carries a Zacks Rank #2 and has a Growth Score of B.
Argentina-based Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil, North Latin America, South Latin America and the Caribbean divisions. It also runs quick-service restaurants in Latin America and the Caribbean. Arcos Dorados has a P/E ratio of 12.17 compared with the industry average of 20.73 and has an estimated earnings growth rate of 13%.
Arcos Dorados has a Zacks Rank #1 and a Growth Score of A.
California-based McKesson is a healthcare services and information technology company. The stock has an expected earnings growth rate of 4.2% for the fiscal year (ending March 2024). It has a P/E ratio of 16.51 compared with the industry average of 21.81.
McKesson has a Zacks Rank #2 and a Growth Score of B.
Beijing-based NetEase is an Internet technology company engaged in the development of applications, services and other technologies in China. It has an estimated earnings growth rate of 30.3% for this year and has a P/E ratio of 15.43 compared with the industry average of 23.08.
NetEase has a Zacks Rank #2 and a Growth Score of B.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Applied Materials, PulteGroup, Arcos Dorados Holdings, McKesson, and NetEase
For Immediate Release
Chicago, IL – September 28, 2023 – Stocks in this week’s article are Applied Materials Inc. (AMAT - Free Report) , PulteGroup Inc. (PHM - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) , McKesson Corp. (MCK - Free Report) and NetEase Inc. (NTES - Free Report) .
Dive into Dividends: Top 5 Bargain Growth Stocks to Buy
Volatility and uncertainty in the stock market have taken the front seat in recent weeks on worries over higher interest rates for a longer time. In such a scenario, dividend investing seems to be a prudent option to fight the current market turmoil. Though dividend-paying stocks don't offer dramatic price appreciation, they provide a consistent income stream.
In particular, focusing on the growth level in this strategy leads to higher returns. Stocks with a strong history of dividend growth year over year form a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those that have high yields. We have selected five dividend growth stocks — Applied Materials Inc., PulteGroup Inc., Arcos Dorados Holdings Inc., McKesson Corp. and NetEase Inc.— that could be compelling picks for investors.
Why Dividend Growth?
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.
Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that a dividend increase is likely in the future.
Although these stocks do not necessarily have the highest yields, they have outperformed for a longer period than the broader stock market or any other dividend-paying stock.
Here are five of the 12 stocks that fit the bill:
California-based Applied Materials is one of the world's largest suppliers of equipment for the fabrication of semiconductors, flat panel liquid crystal displays (LCDs), and solar photovoltaic (PV) cells and modules. The company has a P/E ratio of 17.29 compared with the industry average of 22.12. It has an estimated growth rate of 2.60% for the fiscal year (ending October 2023).
Applied Materials has a Zacks Rank #1 and a Growth Score of B. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Atlanta-based PulteGroup is engaged in homebuilding and financial services businesses, primarily in the United States. The company has a P/E ratio of 6.36 compared with the industry average of 8.15. Its earnings are estimated to grow 7.6% for this year.
PulteGroup carries a Zacks Rank #2 and has a Growth Score of B.
Argentina-based Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil, North Latin America, South Latin America and the Caribbean divisions. It also runs quick-service restaurants in Latin America and the Caribbean. Arcos Dorados has a P/E ratio of 12.17 compared with the industry average of 20.73 and has an estimated earnings growth rate of 13%.
Arcos Dorados has a Zacks Rank #1 and a Growth Score of A.
California-based McKesson is a healthcare services and information technology company. The stock has an expected earnings growth rate of 4.2% for the fiscal year (ending March 2024). It has a P/E ratio of 16.51 compared with the industry average of 21.81.
McKesson has a Zacks Rank #2 and a Growth Score of B.
Beijing-based NetEase is an Internet technology company engaged in the development of applications, services and other technologies in China. It has an estimated earnings growth rate of 30.3% for this year and has a P/E ratio of 15.43 compared with the industry average of 23.08.
NetEase has a Zacks Rank #2 and a Growth Score of B.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2155988/dive-into-dividends-top-5-bargain-growth-stocks-to-buy
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Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.